Chapter VLend-Lease: An Assessment of a Government Bureaucracy

Marcus R. Erlandson

The Lend-Lease program was the largest wartime foreign aid program ever
implemented or conceived. There is little question
that the material that the United States provided to its allies through
Lead-Lease contributed substantially to the defeat of the Axis powers
in World War II. The Commerce Department estimated that the
United States transferred approximately $48.4 billion in goods and
services during the war period.1
Today, after more than fifty years
of inflation, it is difficult to gauge the enormity, of this expenditure.
Considering that the average total expenditure of the federal government
during this period was $63.3 billion per year helps put the
scale of the Lend-Lease program into perspective. The material
wealth and the industrial might of the United States gave the allies
an enormous advantage over the Axis. By 1944 the United States
was producing about 60 percent of all munitions of the Allies. From
the time the United States declared war until the surrender of the
Japanese, it produced more than twice as many munitions as Germany and
Japan combined.2

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Chart 1

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A large body of literature documents the history of Lend-Lease.
Aside from the official histories that the various government agencies
involved with Lend-Lease produced shortly after the war, however,
virtually all of the scholarly treatments of the program have focused
on the issue of America's intentions in devising and directing the
Lend-Lease. As with much of the historical interpretation of U.S.
foreign policy published since the early 1960s, scholars have
concentrated their analyses of Lend-Lease on attempting to determine to
what extent the United States used the program to ensure its
dominance of the postwar world. The critics of American foreign policy
most often cite this alleged quest for dominance as the cause of the
superpower confrontation between the United States and the Soviet
Union that characterized the Cold War period. In essence they assert
that the primary objectives of the United States government in directing
Lend-Lease were to cripple the British economy by insisting on
exhaustive reciprocal payments and to develop a Soviet dependence
on American aid. The accomplishment of these two goals would
effectively neutralize the only two nations who could challenge U.S.
postwar global dominance. Several scholars have challenged this
so-called "New Left" thesis and have suggested that U.S. intentions
were more complex and less self-serving. These authors contend that
Lend-Lease was an innovative program that was at once strategically
astute and politically realistic. In their view the onset of the Cold
War was the result of sharp disagreements between the United States
and the Soviet Union over postwar objectives and domestic political
pressures against supporting a communist state once the Axis
surrendered.3
This study will not extend this overly wrought debate. There

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is little more that can be added to either side of the argument, and,
in light of the fact that the Cold War has ended, the issue is no
longer as relevant as it once seemed.

Another aspect of Lend-Lease has received far less scrutiny and
deserves closer examination. This study will focus primarily on the
Lend-Lease bureaucracy in an attempt to determine how effectively
the program utilized its allocated resources. There is little question
that the program fulfilled its intended purpose of expediting the
Axis defeat; but, for those seeking to benefit from the experience
of the designing and running of history's most massive wartime
foreign aid program, a thorough, critical analysis of the Lend-Lease
bureaucracy would be useful. Given the enormous scope of this issue
and the brevity of this study, it will only be possible to form a
preliminary assessment of the effectiveness of Lend-Lease. This study will
provide, however, ample evidence to support the assertion that
Lend-Lease is an example of minimalist bureaucracy at its finest. Although
at its peak Lend-Lease was a mammoth operation, the bureaucracy
that ran it was highly flexible and decentralized. Characteristically,
it conveyed only the minimum necessary guidance to those charged
with directly executing the government's foreign aid plan. It was
never an all-encompassing bureaucracy or a model of efficiency, but
those were not its designers' intentions. They were far more
interested in effectiveness than efficiency.

Recognizing the distinction between effectiveness and efficiency
is critical to evaluating the merits of the Lend-Lease bureaucracy. An
organization that stresses effectiveness over efficiency places more
emphasis on mission accomplishment than on the conservation of
resources. The United States entered World War II with an enormous
wealth and industrial potential, but only limited time to bolster
the logistical support of its allies before the Axis powers overwhelmed
them. The designers and operators of the Lend-Lease program could
tolerate some inefficiency in the expenditure of resources, but they
could not afford the time that it would take to design and staff a
bureaucracy large enough to maximize the efficiency of an undertaking
on the scale of Lend-Lease. The modest bureaucracy they built
attempted to maximize the quantity and speed of delivery of the
goods it provided to America's World War II allies, while minimizing

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the disruption to the country's efforts to mobilize its own forces.
Lend-Lease largely fulfilled its designers' expectations and in the
process demonstrated the advantages of minimalist bureaucracy in
those instances where effectiveness rather than efficiency is the primary consideration.

As World War II approached there was little indication that
the United States would become the source of massive military aid.
Although American sympathies were clearly with the nations who
allied themselves against Germany, prior to late 1939 the government
maintained a policy of strict neutrality and made virtually no
effort to mobilize the economy for war. Fearing the consequences
of once again becoming involved in a costly European war, Congress
passed the Neutrality Act of 1935 and subsequent amendments in
1936 and 1937, which made it unlawful to grant loans or export
implements of war to any belligerent country. Furthermore, the
Johnson Act of 1934 prohibited any nation in default of payments
to the United States to buy goods on credit. Great Britain and France
placed large orders for munitions, but had to pay for them on a
strict "cash and carry" basis. The situation in Europe became much
worse on September 1, 1939 when Germany invaded Poland. Two
days later both the French and British declared war on Germany,
and the Neutrality Act forced the federal government to freeze their
orders. Sensing that the American public wanted to help the opponents
of Nazi aggression and how desperately Great Britain and
France needed American arms, President Franklin Roosevelt called
a special session of Congress in order to obtain legislative relief.
On November 4, 1939 Congress passed the Pittman Act lifting the
embargo. Filling French and British orders enabled American industry
to gradually convert from commercial to military production. To
facilitate the conversion it was essential to distribute the orders in a
judicious manner. Rather than create a special new bureaucracy, the
government utilized the existing Clearance Committee of the Army
and Navy Munitions Board for this purpose. Another barrier to
America's effort to arm foreign belligerents was that it was still illegal
to purchase directly government-owned munitions. To circumvent
this problem the War Department sold guns and ammunition to the
United States Steel Export Company, which served as an
intermediary.4

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Thus, from the very beginning of America's efforts to arm its
allies, a pattern of using ad hoc arrangements and minimum bureaucracy emerged.

It was not long before the United States chose to deepen its
involvement in the war. The French and British forces proved to be
no match for the German war machine and Blitzkrieg warfare. On
June 10, 1940, a month after launching a surprise attack through
the neutral low countries, Hitler's armies were nearly at the gates of
Paris, and Italy declared war against Great Britain and France. That
same day, in an address delivered at the University of Virginia,
Roosevelt promised that the United States would provide the Allies
with the material resources needed to halt German
aggression.5

Hours before the French capitulated on June 17, 1940, they
assigned all their contracts with American manufacturers to
the British. The problem that now confronted Great Britain was finding the
resources to pay for what it had on order. By the end of 1940 the
British had placed orders with United States firms totalling
approximately $4.5 billion and exceeding the amount that it could cover
with its remaining dollar assets.6
It was clear to Winston Churchill
that Britain would have to come to some sort of cooperative economic
arrangement with the United States if it wanted to continue
to fight the Germans. In May 1940, soon after he became prime
minister, Churchill wrote Roosevelt to inform him that the British
could not go on paying for what they needed much longer and that
he would "like to feel reasonably sure that when we can pay no more
you will give us the stuff all the same." He also asked for the loan
of forty or fifty old destroyers.7
At first Roosevelt was skeptical, but,
when he began to grasp the seriousness of Britain's financial problem,

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he was at a loss in finding a method of dealing with it. Issuing
loans would require repeal of the Neutrality Act, and making outright
grants would be politically untenable before the 1940
elections.8

The solution for handling Churchill's request for destroyers and
establishing a pattern for providing additional aid for the British
came from outside the administration. The Century Group, which
was a division within William Allen White's Committee to Defend
America, suggested a simple formula of exchanging ships for bases.
The United States would lend the destroyers to the British in
exchange for leases to strategic bases in the Atlantic needed for the
defense of shipping routes. The quid pro quo nature of
the deal appealed to Roosevelt and made him confident that Congress would
find it acceptable. Secretary of State Cordell Hull signed the
agreement
on September 2, 1940.9
This original "lend-lease" arrangement not only solved an immediate problem, it provided both the
inspiration and the name for the massive foreign aid program that
would follow.

On December 8, Roosevelt received a cable from Churchill that
described in detail how desperate Britain's position had
become.10
Roosevelt needed no further convincing. With the destroyer-for-bases
deal clearly in mind, he began to frame a simple concept that
would "eliminate the dollar sign" from any aid arrangements made
with the British. He decided that he would propose an extension of
the lend-lease arrangement, whereby the United States would supply
Britain with whatever it needed while asking only that it return the
goods or their equivalent at the end of the conflict. On December
16, Roosevelt held a press conference to announce his plan. He was
deliberately vague on the details of how he expected the British
to replace damaged or destroyed goods. Instead, he stressed how
important British survival was to American security. He offered a

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simple folksy analogy of a person loaning a garden hose to a neighbor
so that he could put out a fire in his burning house that threatened
to engulf both of their dwellings.11
Roosevelt wanted a simple
plan that everyone could easily understand and that would be simple
to execute.

Fearing that the public was still not solidly behind his aid concept,
Roosevelt made a
national radio broadcast on December 29
in which he declared that America would become "the arsenal of
democracy." In his stirring address he pledged that the United States
would supply all nations willing to resist aggression. The following
day, when it was clear that a substantial majority of the American
public supported aid for the British, Roosevelt told Secretary of
Treasury Henry Morgenthau to draft the
Lend-Lease bill.
Roosevelt made it clear that he personally wanted to control all allocations
and set the terms of repayment. In delegating the responsibility to
two of his subordinates, Morgenthau directed them to keep the bill
as simple and straight-forward as possible. He specifically told them,
"no RFC, no monkey business . . . no corporations." By this he
meant they were to direct neither the use of complicated loan
arrangements that the
Reconstruction Finance Corporation
administered nor a specially designed corporation to act as an intermediary
between the federal government and any nation receiving aid.
Morgenthau also told them to leave the repayment issue "very much up
in the air," in order to give Roosevelt maximum flexibility in
arranging final settlements.12
The chief characteristics of the Lend-Lease
program would be minimum bureaucracy, maximum flexibility, and
absolute control in the hands of the President. These characteristics
would largely prevail throughout the program's existence.

The administration did a masterful job of steering the Lend-Lease
bill through Congress. There were still many in Congress who
were strict isolationists and who saw Roosevelt's bill as thinly
disguised scheme to get America involved in the war. A detailed revelation
of the extent of British weakness and firm assurances that the

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President would protect American interests were essential to the
bill's passage. The bill that Roosevelt signed into law on March 8 had
only two significant congressional amendments. One amendment
set a limit of $1.3 billion on the value of already existing military
equipment that the government could transfer. The other amendment
prohibited the payment for future Lend-Lease goods from future
military appropriations, which meant that the President would
have to request all Lend-Lease funds from
Congress.13
Roosevelt received all of the power and flexibility to administer the program
that he could have reasonably expected, and he wasted no time putting that power to use.

There is little question that the passage of the Lend-Lease Bill
was one of the major turning points of the war. Germany had not
planned for the protracted war that the economic might of the
United States would now enable. The positive psychological effect
on the British was also considerable. Churchill described Lend-Lease
to Parliament as "the most unsordid act in the history of
any nation."14

Roosevelt never intended that Lend-Lease be a one-way arrangement.
He fully expected that Britain would be able to provide some
reciprocal aid to the United States during the war. He left the details
of establishing this arrangement and getting the British to agree to
some general terms on postwar reimbursement to Morgenthau and
Secretary of State Cordell Hull, but warned them that he did not
want anything to interfere with the operation of the program. Hull
insisted on at least getting the British to agree to more liberal
trading relations after the war as a note of gratitude to the United States
for the aid they would receive. The British were reluctant to give up
the restricted trading privileges they enjoyed with the Commonwealth
and therefore dragged out negotiations for nearly a year.
Finally, they agreed to at least cooperate in negotiations on the matter
after the war and signed the Mutual Aid Agreement on February
23, 1942. Reverse Lend-Lease did indeed prove beneficial to the
United States. From the Commonwealth alone it received more than
$6.7 billion in goods and services over the course of the war.

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Chart 2
provides a detailed breakdown of the sources of reverse Lend-Lease.
For example, over 30 percent of the supplies that the American troops
used for D-Day came from the British.15

Roosevelt did not wait for the British to sign the agreement
to implement the provisions of Lend-Lease. On March 27, 1941,
Congress granted his first appropriation request for $7 billion.
Before any British requests for aid could be filled, the President had
to decide how Lend-Lease would be administered, and, more importantly,
how production would be divided between filling requests
from the country's own armed forces and those of its new allies.
Roosevelt received several suggestions, which ranged from developing
an elaborate bureaucracy specifically designed to administer foreign
supply to organizing a committee of the cabinet and other
administration officials who had a vested interest in the program.
The President rejected all of these suggestions, preferring instead to
keep directive authority in his own hands. On the same day Congress
granted the first appropriation, Roosevelt designated Harry Hopkins
"to advise and assist" him in running Lend-Lease. As his closest
confidant, Hopkins was counted on by Roosevelt to keep an eye on
things and ensure that the program ran according to his wishes.
Three weeks earlier, Roosevelt had dispatched another confidant to
London to make sure things ran smoothly at the other end. W. Averell
Harriman's official rank was Minister, but people referred to him
as the "Expediter."60
Roosevelt knew that it was essential to get Lend-Lease
running as quickly as possible. He was not about to allow either
a cumbersome bureaucracy or an indecisive committee to slow things down.

Roosevelt believed that at this juncture in the war only he could
decide on the types and quantities of supplies the allies should
receive and the priority that Lend-Lease should have relative to the
effort to equip America's own armed forces. This highly centralized
approach displeased several key members of Roosevelt's cabinet.
Secretary of State Hull disliked an arrangement that deprived his department

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Chart 2

Statement XIV.--Reverse lend-lease aid received from
foreign governments, by country and by appropriation
category, cumulative to Sept. 2, 1945, as of June 30, 1947

Country

Total

Ordnance andordnance stores

Aircraft andaeronauticalmaterial

Tanks andother vehicles

Vessels andotherwatercraft

Belgium

$191,215,983.35

$3,617,925.44

$10,359,801.55

$112,520.57

British Empire

6,752,073.165.40

117,913,403.18

450,479,590.59

97,774,454.48

219,453,451.26

China

3,672,000.00

3,672.000.00

France

867,781,244.70

Netherlands

2,367,699.64

193.12

1,134,587.73

U.S.S.R.

2,212,697.81

Grand total

7,819,322,790.90

121,531,328.62

454,151,590.59

108,134,449.15

220,700,559.56

Country

MiscellaneousMilitaryequipment

Facilities andequipment

Agricultural,industrial andothercommodities

Testing,reconditioning,etc., of defensearticles

Servicesandexpenses

Belgium

$19,538,701.97

$23,997,746.10

$18,253,987.96

$33,352.710.97

$81,982,533.79

British Empire

1,314,423,424.49

1,556.203,888.20

1,876,612,638.62

193,278,393.88

925,933,920.70

China

France

72,132,115.38

201,674,487.02

136,959,069.04

4,988,920.92

452,026,652.34

Netherlands

35,461.11

203,281.67

92,101.22

59,636.11

842,438.68

U.S.S.R.

2,212,697.81

56,785.84

2,155,911.97

Grand total

1,406,129,702.95

1,782,136,188.83

2,031,917,796.84

233,835,573.85

1,460,785,600.51

of control of such an important instrument of foreign policy.
Morgenthau had hoped that his Treasury' Department would continue
to have the pivotal role it had occupied in arranging the purchases
with the Allies prior to the passage of
Lend-Lease.17
The War Department was particularly concerned that managing a military aid
program outside of the control of the military establishment would
stymie war planning and preparation.18
Although Roosevelt himself
made all the major decisions concerning the distribution of resources,
he freely delegated operating authority. He relied on the

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departments and agencies that were responsible for the production
of each commodity to procure and deliver items in accord with his
guidance.19

It was not long before the administrative overhead associated
with running such a massive program caused Roosevelt to grudgingly
begin the building of a Lend-Lease bureaucracy. On May 6 he ordered
the establishment of the Division of Defense Aid Reports in the
Office of Emergency Management.
He appointed Major General James H. Burns to head the organization, but granted him the modest
title of executive officer rather than administrator. The job of
the new division was to coordinate the processing ot requests for
aid, maintain records and accounts, prepare progress reports, serve
as a clearinghouse of information, and "perform such duties relating
to defense aid activities as the President may from time to time direct."
Over the next few months Roosevelt gradually expanded
Burns's authority. In a July 26 letter, the President granted him the
authority to transfer defense articles worth up to $15 million to those
countries whose defense the President had declared were vital to
the defense of the United States. On August 29 he gave Burns the
authority to authorize transfer or revoke transfers of selected defense
items within the overall allocation of funds. Furthermore, Burns
could regulate the quantities of procurement agency purchases as he
deemed appropriate.20
Roosevelt had moved a considerable distance
toward sharing his responsibilities for the administration of Lend-Lease,
but the arrangements he had through the end of August were
remarkably modest given the task at hand. While there was some
confusion about priorities among both producers and government
agencies that had a stake in the foreign aid program, a substantial
volume of aid was already flowing to Great Britain. By the end of
1941 the British had received over a billion dollars of Lend-Lease aid.
At first only modest amounts of aircraft and other military equipment
were available for shipment, since American industry was only beginning
to convert to the production of war materials. Both the amount
of aid and the percentage of it that was military hardware would
increase dramatically over the next two years
(see Chart 3, next page).

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Chart 3

United States Lend-Lease Aid to the British Commonwealth ($ million)

1941 (Mar. to Dec.)

1942

1943

1944

1945 (Jan. to Aug.)

Total

Ship (sail away)

65

195

1,078

540

229

2,107

Munitions destined for:

--United Kingdom

86

987

2,797

3,807

971

8,648

--Rest of Commonwealth and other war theatres

100

1,158

2,131

2,294

1,203

6,886

Other goods destined for

--United Kingdom

576

1,404

1,782

2,405

1,275

7,442

--Rest of Commonwealth

10

227

436

583

390

1,646

Services

245

786

807

1,137

369

3,344

Total aid to British Commonwealth

1,082

4,757

9,376

10,766

4,437

30,073

Aid to Russia

20

1,376

4,074

2,764

10,670

Aid to other countries

2,872

Total lend-lease aid

43,615

Composition of United States Lend-Lease Aid to the British Commonwealth ($ million)

The question that now needed an answer was how much was
enough. American industry was beginning to mobilize for war, but
no one had a clear idea of what or how much it needed to produce
to equip both U.S. military forces and those of the Allies. The military
did not have a strategic plan for a global
war.21
The President sent requests to the Secretaries of War and the Navy, asking them to
jointly estimate the production requirements for both Lend-Lease
and equipping United States forces in the event that the country
should have to go to war.22
The military responded with what became known as the
Victory Plan.
The plan provided a comprehensive statement of the American strategy
for war as well as estimates of overall
production requirements. The services had a firm fix on their own
needs but could only speculate as to the needs of the Allies. The
task now fell to the civil authorities to attempt to get a firmer
grasp of the requirements of the countries the United States intended
to aid.23

Clearly, the best way to determine the long-term requirements
of the Allies necessary to the establishment of production objectives
was to ask them. Although Roosevelt had deemed several other nations
eligible for Lend-Lease aid in early 1941, it was clear that the
overwhelming focus of the program would be on Great Britain.
As a major industrial nation that was already mobilized for war, Britain
was capable of meeting many of its own needs. The best way for the
Americans and British to maximize their collective war production
was to share as much information as possible. Stacy May, an accountant in the
Office of Production Management,
developed a ledger that listed in detail American military requirements, current and
potential production capabilities, and current and potential material stocks.
Secretary of War Henry Stimson asked May to get a leave of
absence from OPM and sent him to London with a request that the
British fill in the blank columns with their equivalent estimates.

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When the British complied, both countries had a clear blueprint for
further mobilization and the foundation for the "pooling concept"
for the distribution of wartime production. All of the major
military and civilian procurement agencies shared the information
in May's book.24
Once again a simple ad hoc contrivance rather than a complicated
bureaucratic process quickly fulfilled a critical requirement of Lend-Lease.

On June 22, 1941, Germany attacked the Soviet Union. The
challenges facing Lend-Lease now became far more complicated. A
few days later Roosevelt publicly pledged that the United States
would provide all of the aid that it could to Russia. Convincing
Congress and the American people that they should support a communist
state, however, was a considerable challenge for the President.
Initially, Roosevelt was skeptical about Russia's ability to hold
out against the Germans. After Harry Hopkins returned from a visit to
the Soviet Union with encouraging news, Roosevelt announced on
August 2 that the United States would give the Soviets "all the
economic assistance practicable," but not under the provisions of
the Lend-Lease Act. In September a joint British and American delegation
traveled to Moscow to consult with Stalin and determine how the
Soviets would utilize Allied aid. The conference produced a protocol
listing the items that the British and Americans agreed to supply
over the next twelve months. This protocol arrangement became
the pattern for negotiating support for the Soviets throughout the
remainder of the war.25

Even before Roosevelt formally declared, on November 7, 1941,
that defense of the Soviet Union was vital to the defense of the
United States and brought the Soviets under the provisions of the Lend-Lease Act,
it was clear that the current aid administration would not be equal
to the rapidly expanding task. Back in July 1941, Roosevelt had
directed Major General Burns and his Division of Defense Aid

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Reports to assume responsibility for coordinating the transfer of
supplies and equipment to the Soviets. Only a small number of items
were cleared for shipping during the first few months, but it was
obvious there would soon be more. On October 28, 1941, Roosevelt
abolished the Division of Defense Aid Reports and established the
Office of Lend-Lease Administration (OLLA).
The authority the President delegated to the OLLA had previously required his own
signature. Roosevelt appointed Edward R. Stettinius, Jr., as
administrator, and specified that, subject to such politics that the President
might from time to time prescribe, Stettinius would exercise any
authority that the Lend-Lease conferred upon the
President.26
The bureaucracy of Lend-Lease was growing steadily, but only in accord
with the growth of its task. As an independent agency reporting
directly to the President and involved with policies that were of keen
interest to him, OLLA was in little danger of becoming bogged down
in its own bureaucracy or losing its sense of urgency.

The activity of the Office of Lend-Lease Administration picked
up steadily from nearly the moment of its creation. Roosevelt
convinced both Congress and the American people that it was
reasonable to support communist Russia as long as it was fighting
the Axis.27
On the day that the President declared that the Soviet Union was
eligible for aid under the provisions of the Lend-Lease Act, Congress
appropriated a billion dollars earmarked for its support. Ten days
later Congress repealed the Neutrality Act of 1939, thus removing
a serious barrier to the flow of Lend-Lease goods. A shortage of
shipping would continue to inhibit the flow of aid, but at least
now American vessels could arm themselves and carry cargoes to
belligerent ports. The attack on Pearl Harbor caused a brief delay in the

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flow of Lend-Lease supplies. For a few days the Navy and War Departments
ordered the freezing of Lend-Lease shipments while they waited to
see if the Japanese would continue their attacks on American territories.
The services diverted a small quantity of airplanes and other
supplies to equip some American units, but soon allowed
the Lend-Lease shipments to resume.28

With the addition of the Soviet Union to the Lend-Lease program,
the administrative burden on the OLLA increased significantly.
The problem of supporting China also required a good deal
of attention. China was in desperate need of all types of supplies
and equipment in its unequal struggle against the invading Japanese.
Because of the remote locations of China's fighting forces, the first
priority for Lend-Lease aid was for rebuilding their life-line, the
Burma Road, and providing fighter aircraft to protect it. During the
first year after the passage of the Lend-Lease Act a total of 33
countries became eligible for Lend-Lease aid.29

The next major bureaucratic reorganization that would affect
War Production Board (WPB)
replace the Office of Production Management and the Supply Priorities
Allocations Board. These two agencies had limited power and served
largely as coordinating bodies. In establishing the WPB, the President
consolidated functions and strengthened the authority of a
single administrator. Roosevelt appointed Donald M. Nelson,
Chairman of Sears Roebuck, as head of the board and granted him broad
authority in setting priorities and controlling the economy. Nelson
chose to exercise his authority with great discretion, and,
as a consequence, other agencies and committees exercised substantial
autonomy in allocating resources. Nelson's behavior had considerable
justification. He feared that the establishment of a new super-bureaucracy
would cause the nation's mobilization efforts to lose

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momentum. In reflecting on his actions when he first assumed his
new position, Nelson recalled, "it obviously would have been foolish
for us to try to do anything that some existing agency was already
doing satisfactorily."30
As a general rule he worked through existing
organizations and their established leaders as much as possible. Since
it could not rely on either the President or Donald Nelson to
adjudicate all disputes over priorities, the Office of Lend-Lease
Administration had to work cooperatively with several organizations in order
to accomplish its mission.

As the United States forces became combatants in the war,
America's priorities shifted and the Office of Lend-Lease Administration
had to adjust accordingly. On April 9, 1942, in recognition of
the need to give the services a greater say in the military procurement
process, Congress adopted the policy of appropriating all funds for
war materials directly to the service departments. This change greatly
simplified both accounting and contracting for military equipment.
Prior to the passage of this act, the OLLA received direct
appropriations from Congress to purchase Lend-Lease goods. Under the old
system OLLA used the services as procurement agents, but had to
allot specific funds for specific products. The services' standard
practice was to pool Lend-Lease funds with their own procurement funds
prior to issuing contracts. Thus, manufacturers would make tanks
without regard for whether they were producing Army tanks or Lend-Lease
tanks. While this practice kept accounting simple for the producers,
it made it complicated for both the services and the OLLA,
especially when they attempted to juggle contracts in response to
the President's directives to speed up aid to "allies. Under the new
arrangement, Congress allotted funds to the services earmarked for
Lend-Lease. OLLA and the services merely kept track of the gross
quantities of Lend-Lease funds spent for each country and made
allocation decisions for finished products based on immediate
strategic needs. Although the Lend-Lease administration grew steadily to

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meet expanding requirements, one of its most important procedures
simultaneously became simpler and more flexible.31

Once United States forces became combatants, the munitions
allocation procedure became the critical step in the military
procurement process. The scale of production was becoming too massive
for Roosevelt and his close personal advisors to handle alone. In
early 1942 at the ARCADIA conference, Roosevelt read to his Army
Chief of Staff, George Marshall, a proposal for a munitions allocation
board that would be directly responsible to the President and the
British Prime Minister. Marshall responded flatly that unless the
board was subordinate to the Combined Chiefs of Staff (CCS) he
would resign. The CCS was a newly created organization that
combined the top ranking officers of the American and British military
services into a single staff that met to plan and coordinate all strategic
military operations. Harry Hopkins, who witnessed the incident,
wholeheartedly concurred with Marshall's position. The allocation
of munitions, he agreed, should never be considered outside of the
military strategic planning process. Although the demand apparently
caught Roosevelt off guard, he agreed to establish a munitions
assignment board in Washington and another in London both responsible
to the CCS in Washington, for which he obtained Churchill's approval.
Roosevelt noted that this was merely a preliminary arrangement
and that he and Churchill retained the authority to resolve any
disagreements that might arise. The Munitions Assignment Boards
(MAB) in fact remained in control of the assignment of all military
hardware throughout the remainder of the war.32

Hopkins served as the chairman of the Washington MAB, but
in practice the most important positions were those of the chairmen
of the powerful ground, air, and naval subcommittees, who made
allocation decisions in their respective areas. Through this system,
General Brehon B. Somervell, chief of the Army Service Forces, as
chairman of the MAB(Ground), controlled the allocation of nearly
all military items manufactured in the United States.
Somervell saw to it that many Lend-Lease requests were filled,
but he exhibited a clear preference for equipping American forces first. Lend-Lease

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support to the Allies increased steadily during the war mostly because
the United States was able to produce much more than it needed
for its own forces.33

Neither the Army nor the Office of Lend-Lease Administration
had much to say about the allocation of resources to one recipient.
The United States distributed aid to the Soviets strictly according to
the annual negotiated protocols. Roosevelt personally saw to it that
the protocol lists were filled to the maximum extent possible, even
at the expense of supporting American troops. Initially, the United
States fell well short of filling the commitments it made to
the Soviets.34
There are a number of reasons that this occurred, but none of
these appears to be directly related to either organizational or
procedural failures on the part of the Lend-Lease administration.

Roosevelt made his first commitments of aid in the summer of
1941 when American industry was still in the early stage of conversion
to military production. The entire American volume of tank armor
plate for the next twenty-four months would not have covered the
initial Russian request.35
The number of medium tanks the American
negotiators agreed to in the first protocol was based on the faulty
assumption that United States tank producers could double their
output in a year.36

The most persistent problem that would challenge the Allies in
their effort to supply the Soviets was the significant set of
transportation obstacles. Unlike the British, the Soviets had
negligible merchant shipping. The United States would eventually
build a huge merchant fleet, but, again, neutrality had seriously
delayed the mobilization of the shipbuilding industry. Naval
access to Russia was limited in the best of times. The Soviet Union's
few significant ports were
frozen much of the year, and their port and internal transportation
infrastructure had limited capacity. At first the British and
Americans focused on using the Soviets' preferred northern route,
but German submarines and ice made this route particularly
difficult.37 In 1942

--28--

Chart 4

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Chart 5: Shipments to U.S.S.R.

Source: Department of State, Report on War Aid Furnished by the United States to the U.S.S.R. (November 28, 1945), 26.

the United States lost 12 percent of its vessels that attempted to
use that route.38
Eventually, the United States developed safer and more reliable
alternative routes, Lend-Lease funds helped to expand greatly
the Pacific port of Vladivostok and construct a transportation
network through Iran. Beginning in 1941, the Army established a
major command in Iran to supervise the building and operation of ports,
final assembly factories, and rail lines that by 1943 had become
one of the most heavily used supply routes.39

Transportation problems and manufacturing shortages, however,
do not entirely explain the Americans' early shortfalls in supplying
the Soviet Union. Most of the materials the Soviets wanted were

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those that the War Department was responsible for supplying. There
is little question that the War Department was guilty of some foot
dragging. Marshall and Stimson were both reluctant to supply the
Soviets when it appeared in 1941 that they might not be able to
withstand the German onslaught. Also the requests in late 1941 and
early 1942 came precisely when the Army was most desperate to
begin its own mobilization in the wake of Pearl Harbor. At this same
time the Lend-Lease requests of Great Britain and China were placing
their most severe strains on the War Department procurement
system.40

Roosevelt personally blasted the War Department for delays and
used the OLLA to verify compliance with his wishes. Stettinius,
General Burns, and Hopkins were all in agreement with the President's
desire to place the highest priority on supplying the
Russians.41 The
OLLA established a field office in Moscow, which greatly facilitated
arrangements with the Soviets. Colonel Phillip Faymonville, the head
of that office, was so insistent that nothing interfere with supplying
the Russians, and so unyielding in his refusal to allow Lend-Lease
aid to be used as a tool for extracting information from the secretive
Russians, that some questioned his loyalty. But Admiral William H.
Standley, the ambassador to Moscow, conceded that Faymonville was
simply executing the President's policy.42

For a time the Soviets where able to use the American quota
shortfalls as a means of pressuring the United States into redoubling
its efforts. By the end of 1943, however, the United States
was fulfilling virtually all of the Soviet Union's seemingly insatiable needs.
Chart 6 (next page) depicts the enormous increases in the deliveries of the most
critical war materials. By the end of the war the Soviets had received
from the Americans 11,450 planes, 7,172 tanks, and 433,000
trucks. 43

Throughout 1942 and 1943, the volume of Lend-Lease continued to expand,
reaching its peak in 1944. Despite the enormity of
its task, the Lend-Lease administration remained surprisingly small.
In testimony before the House Foreign Relations Committee on
January 29, 1943, Edward Stettinius remarked that his organization had
fewer than 600 people, and they were scattered all over the world.
To reinforce his point, he added: "If we had gone out to do this
job ourselves we would have had to have many, many thousands of
people duplicating the facilities and organization of already existing
efficient agencies in Washington."44

Before the end of the war, the Lend-Lease Administration would
undergo one more major adjustment. During the war the United
States government had established a number of agencies to handle
various aspects of its foreign economic policy. As American forces
began to occupy more formerly enemy-controlled territory, several
of these agencies came into conflict with each other over policy
and jurisdictional matters. The State Department established a new
organization called the Office of Foreign Economic Coordination
to resolve the problems, but it soon proved unequal to the task.

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The President turned to the reliable, flexible Office of Lend-Lease
Administration to form the foundation of a new organization outside
the Department of State to collectively manage all of the nation's
foreign economic programs. On September 25, 1943, the President
issued an order establishing the
Foreign Economic Administration
and consolidating more than a dozen agencies and offices. While
this act created a new, fairly large bureaucracy, it consolidated a
number of functions, and eliminated a whole host of smaller
bureaucracies.45

In little more than a year, the Foreign Economic Administration
(FEA) would itself disband. With the enormous task of fighting the
war complete, the organization had outlived its purpose. Rather than
attempting to adjust the FEA to an entirely new mission,
the government disbanded it and released its members, who were mostly private
citizens who had offered their services in support of the war effort.
The organization that coordinated and sometimes directed history's
largest wartime foreign aid program had evolved from a single
advisor into a large multifunctional agency. Along the way it grew just
quickly enough to enable it to continue to accomplish its mission.
Throughout its brief history the characteristics of America's
Lend-Lease administration had remained minimal bureaucracy and maximum flexibility.

Another indication of the Lend-Lease program's minimal bureaucracy
is the modest amount of funds it expended on administrative expenses.
Over the life of the program, less than one-tenth of
one percent of the funds Congress allocated for Lend-Lease were
charged to administrative expenses (see Chart 7, next page). While efficiency
may not have been the primary concern of the Lend-Lease administrators,
it appears that they wasted little of the government's resources
on expenditures not directly related to supporting the country's allies.

An assessment of the merits of America's Lend-Lease program
and its bureaucratic approach must ultimately rest on an assessment
of its effectiveness in accomplishing its assigned task.
Minimal bureaucracy and flexibility are better only if they produce better results.
If America's ultimate aim in World War II was to defeat the Axis as

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Chart 7

Statement I.--Statement of operations under the Lend-Lease Act,
cumulative through June 30, 1947

Type of Defense Aid

Charged to foreign governments

Not distributed by foreign governments

Total

Transfers to foreign governments

$44,228,324,404.90

$44,228,324,404.90

Services and other expenses

3,534,903,377.68

3,354,903,377.68

Consignments to commanding generals

632,007,595.95

632,007,595.95

Transfers to Federal agencies

725,589,141.95

725,589,141.95

Losses on inventories and facilities

31,072,272.57

31,072,272.57

Production facilities

720,641,686.66

720,641,686.66

Miscellaneous charges

332,200,098.31

332,200,098.31

Administrative expenses

39,257,580.77

39,257,580.77

Total defense aid provided

48,395,235,378.53

1,848,760,780.26

50,243,996,158.79

Source of Funds

From funds appropriated to--

--Lend-Lease Administration

$25,231,776,585.66

--War Department

19,488,377,685.32

--Navy Department

4,745,554,742.96

--Maritime (War Shipping Administration)

620,647,410.38

--Coast Guard (Treasury)

12,965,897.56

From foreign government funds1

143,631,442.20

From reissues of returned lend-lease articles

1,042,394.71

Total

$50,243,996,158.79

1. In addition, the foreign governments have paid
approximately $900,000,000 to the United States for lend-lease
items purchased out of U.S. Government funds. This money has or
will be reappropriated or deposited to the general fund of the Treasury.

expeditiously as possible while minimizing losses, it is difficult to
imagine how Lend-Lease could have contributed more to that aim.

From the perspective of America's major allies, the administration
of Lend-Lease was highly effective. The British were in dire
straights in 1941 when the United States started funneling resources
to them through Lend-Lease. America's ad hoc approach got supplies
moving quickly while the threat to Great Britain was most severe,
and the British all along received the overwhelming preponderance
of the aid. A more deliberate approach may have delivered the goods
more efficiently, but, for the British, timing rather than larger quantifies of goods was key.

It is more difficult to gauge the relative effectiveness of Lend-Lease
to the Soviets. During the Cold War the USSR clearly downplayed
the importance of American aid to its achievement of victory.
In a recent study, a Russian scholar asserted that Lend-Lease aid may

--290--

not have made a decisive contribution to the defeat of the Germans
on the Eastern Front, but the small quantities that arrived early came
when the Russian situation was most grave. The contribution of
Lend-Lease may have been more psychological than
material.46
The Russians wanted an assurance that they were not fighting alone.
Again, timing rather than efficiency, was key. By 1943 the Lend-Lease
administration was delivering an enormous amount of supplies and
equipment under the most difficult of circumstances. While much
of this aid arrived too late to physically help the Soviets stop the
German advance, it certainly proved useful in their subsequent
counter-offensive.47

From the perspective of America's own forces, the administration
of Lend-Lease was also effective. It is possible the Lend-Lease
program delayed the entry of American forces into combat in Europe
in World War II and it is certain that Lend-Lease caused them
to be less well-equipped.48
There is no evidence, however, that this
was the result of bureaucratic inefficiency. Policy decisions
that prescribed sharing resources with allies and in some cases granted
higher priority in filling requirements for allies are sufficient
explanations for the effects the program had on United States forces.
American fighting men and women nevertheless benefitted from
the effective administration of Lend-Lease. For every Allied unit that
was able to stay in the fight because of supplies and equipment from
Lend-Lease, American units were spared assuming a greater share
in combat.

Lend-Lease was not exceptional for the fact that Roosevelt and
his subordinates chose the minimal bureaucratic approach in its
administration. The United States government used a similar approach
in the design and administration of most of its World War
II agencies. Indeed, this preference for flexible, ad hoc arrangements
over precisely constructed bureaucracies may be part of a cultural
phenomenon noted by scholars in the development of American

--291--

government agencies through the middle of the twentieth
century.49
Few of America's World War II ad hoc agencies, however, worked
as well as the Lend-Lease administration. While the federal
government had to disband many of its agencies as they failed
to accomplish their intended purposes, it merely expanded the
Lend-Lease administration as its tasks grew. This may have been
because of the unique nature of the program or because it enjoyed
the close personal attention of President Roosevelt.
In either case, Lend-Lease is certainly a worthy subject for
those who are interested in studying an example of a successful minimalist bureaucracy.

Footnotes

1.
U.S. President, Twenty-seventh Report to Congress on Lend-Lease Operations,
(Washington, D.C.: Government Printing Office, 1949) 3;
and Department of Commerce, Foreign Aid by the United States Government, 1940-1951
(Washington, D.C.: Government Printing Office, 1952), 2.

2.
Historical Statistics of the United States: Colonial Times to 1970
(Washington, D.C.: Government Printing Office, 1975), series Y339-42;
Alan S. Mihvard, War, Economy and Society, 1939-1945
(Berkeley: University of California Press, 1977), 70;
and Bureau of the Budget, The United States at War
(Washington, D.C.: Government Printing Office, 1946),
507.

3.
For examples of the New Left interpretations of Lend-Lease see
William Appleman Williams, The Tragedy of American Diplomacy, second revised and enlarged
edition (New York: Dell Publishing, 1972);
Lloyd C. Gardner, Economic Aspects of New Deal Diplomacy
(Madison: University of Wisconsin Press, 1964);
and Gabriel Kolko, The Politics of War: The World and the United States Foreign Policy, 1943-1945
(New York: Random House, 1968).
For examples of the critics of the New Left interpretation of Lend-Lease see George C. Herring,
Aid to Russians,1941-1946: Strategy, Diplomacy, the Origins of the Cold War
(New York: Columbia University Press, 1973);
John Lewis Gaddis, The United States and the Origins of the Cold War, 1941-1947
(New York: Columbia University Press, 1972);
and John C. Brewer, "Lend-Lease: Foreign Policy Weapon in Politics and Diplomacy, 1941-1945"
(Ph.D. diss., University of Texas at Austin, 1974).

4.
War Department, International Division, U.S. Army Service Forces,
A Guide to International Supply, 31 December 1945, General Collection,
National Defense University Library, Washington, D.C., 3-4.
See also Milward, 48-49.

16.
Bureau of the Budget, The United States at War: Development
and Administration the War Program of the Federal Government,
(Washington, D.C.: Government Printing Office, 1946),
48-49;
and Sherwood, 267-269.

18.
Richard M. Leighton and Robert W. Coakley, Global Logistics and Strategy, 1940-1943,
U.S. Army in World War II, The War Department series
(Washington, D.C.: Government Printing Office, 1955),
78;
and General Albert C. Wedemeyer, Wedemeyer Reports!,
(New York: Henry Holt and Company, 1958), 69.

24.
Donald M. Nelson, Arsenal of Democracy: The Story of American War Production
(New York: Harcourt, Brace and Company, 1946), 129-135;
and Overy, 215.

25.
Overy, 206-208;
Sherwood, 343-348;
and Robert H.Jones,
The Road to Russia: United States Lend-Lease to the Soviet Union
(Norman: University of Oklahoma Press, 1969), 35-64.
For a complete listing of all of the protocols see Department of State,
Soviet Supply Protocols (Washington, D.C.: Government Printing Office, n.d).

27.
The building of popular support for including the Russians under the
Lead-Lease Act was yet another testimony to Roosevelt's political skills.
The President went so far as to secure the endorsement ot Pope Pius XII,
who declared that there was a distinction between aiding the Soviet Union
and aiding communism. For detailed analyses of Roosevelt's actions see Raymond H. Dawson,
The Decision to Aid Russia, 1941: Foreign Policy and Domestic Politics
(Chapel Hill: University of North Carolina Press, 1959), 67-109;
and Herring, 7-9, 18-21.

28.
A Guide to International Supply, 10-12;
and Leighton and Coakley,
247,
270.

30.
Nelson, 202.
See also The United States at War,109-111;
and Theodore A. Wilson, "The United States: Leviathan," in
Allies at War: The Soviet, American, and British Experience, 1939-1945,
ed. David Reynolds, Warren Kimball, A. O. Chubarian (New York: St. Martin's Press, 1994), 177.

31.
Leighton and Coakley,
90,
259;
and A Guide to International Supply, 16.

39.
Hubert P. van Tuyll, Feeding the Bear: American Aid to the Soviet Union, 1941-1945
(New York: Greenwood Press, 1989), 26-27;
and Overry, 206-208.
For a detailed account of the Army's efforts to supply the Russians through Persia see
T.H. Vail Motter,
The Persian Corridor and Aid to Russia,
United States Army in World War II
(Washington, D.C.: Government Printing Office, 1952).

42.
van Tuyll, 9-10;
and Herring, 103. Vice President Henry Wallace interviewed
Faymonville when he returned to Washington after being relieved in late 1943;
see John M. Blum, The Price Of Vision: The Diary of Henry A. Wallace, 1942-1946
(Boston: Houghton Mifflin, 1973), 274-275.

43.
Jones, 118-119. Detailed figures on final counts of equipment the Soviet's
received are in "The United States Army in World War II: Statistics, Lend-Lease,"
Lend Lease File 400.336, United State Army, Center of Military History, Washington, D.C.

49.
For studies that examine America's preference for minimal beauracracy
see Barry D. Karl, The Uneasy State: The United States from 1915 to 1945
(Chicago: University of Chicago Press, 1983);
and Theda Skocpol, Protecting Soldiers and Mothers: The Political Origins of
Social Policy in the United States (Cambridge, Mass.: Belknap Press, 1992).

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